Effect of market structure on renewable energy Development—A simulation study of a regional electricity market in China

Abstract

To achieve the carbon-neutral goal set for 2060, China has promoted renewable energy development for more than two decades. Meanwhile, China's electricity market is undergoing a new round of reform by introducing more market-oriented mechanisms and changing the market structure. This paper investigates the impact of three electric utility market structures experimented with in China on promoting renewable energy through a simulation model. The three market structures are vertical monopoly, weak monopoly (separation of power generators and grids), and monopolistic competition (Cournot-Nash competition). The model is calibrated with the actual data of the regional utility network in Beijing, Tianjin, and Tangshan areas. The simulation results show that the electricity market structure plays a vital role in renewable electricity, and the competition among utilities tends to benefit renewable energy development (wind power here). The study's conclusions are helpful to our understanding of further reforms in the electric utility industry and the long-term clean energy target in China.